In one of my previous post, S&P 500 index ETF came in tops in terms of performance based on an initial investment of €10,000 from 2005. This post will show you which S&P 500 ETF to buy and what are the differences in the different S&P 500 ETF
Basic Summary
United States Domiciled ETFs
| Vanguard S&P 500 ETF | BlackRock S&P 500 ETF | State Street Global Advisor S&P 500 ETF | |
|---|---|---|---|
| Stock Symbol | VOO | IVV | SPY |
| Expense Ratio | 0.03% | 0.03% | 0.0945% |
| Net Asset | 573.0B | 228.4B | 303.54B |
| Distribution Type | Distributing | Distributing | Distributing |
Ireland Domiciled ETFs
| Vanguard S&P 500 ETF | BlackRock S&P 500 ETF | State Street Global Advisor S&P 500 ETF | |
|---|---|---|---|
| Stock Symbol | VUSD | CSPX | SPY5 |
| Expense Ratio | 0.07% | 0.07% | 0.09% |
| Net Asset | 26.0B | 39.47B | 5.06B |
| Distribution Type | Distributing | Accumulating | Distributing |
US Domiciled vs Ireland Domiciled
Withholding Tax Rate
One of the differences between a US and Ireland Domiciled ETFs the Withholding Tax Rate. For a non-US investor, the default rate is 30%. If you reside in a country that has tax treaty with US, then this rate might be lower. You can find out if your country has tax treaty with US here.
But for Ireland Domiciled ETFs, because US and Ireland has a tax treaty, the Withholding Tax Rate is at 15%.
So as a non US investor residing in Singapore, I get taxed 30% of the distribution when buying US Domiciled ETFs. But Ireland Domiciled ETFs are taxed at 15%.
US Estate Taxes
The US imposes up to 40% estate tax rate on US assets above USD$60,000 of the deceased non resident.
E.g. If I hold $100,000 worth of US Domiciled ETF, and unfortunately pass away, then $40,000 of my US Domiciled ETF will be taxed at 40%.
Which S&P 500 ETF should you buy?
If you are non US resident planning to buy and hold long term, then go with the Ireland Domiciled S&P 500 ETFs. I would prefer either Vanguard S&P 500 ETF (VUSD) or BlackRock S&P 500 ETF (CSPX) because of the lower expense ratio.
If you want to reinvest your dividend, then go with BlackRock S&P 500 ETF (CSPX), which is of Accumulating Type.
If you are a US resident, then just go with any of the US Domiciled S&P 500 ETFs. I would choose the one with the lower expense ratio.
If you are looking to trade the ETF, then you will want one that has the highest liquidity, which is the State Street Global Advisor (SPY) based on the average trading volume.
| Vanguard (VOO) | BlackRock (IVV) | State Street Global Advisor (SPY) | |
|---|---|---|---|
| Avg. Volume | 3,251,124 | 3,787,098 | 75,172,243 |
Don’t overthink to much on this, as all these ETFs have lower than average expense ratio compared to other funds.
How to purchase these US and Ireland Domiciled ETFs?
For the US Domiciled S&P500 ETFs, they are traded on the NYSE Arca. As long as your brokerage supports this market, you should be able to purchase them.
For Ireland Domiciled S&P500 ETFs, they are traded on the LSE (London Stock Exchange). As long as your brokerage supports this market, you should be able to purchase them too.
If you are Singapore based, and looking to do DCA (dollar cost averaging), you can look into using Kristal.AI. They charge 0 fees for the first $10,000.
